S&U plc (SUS) Earnings Call Transcript & Summary

Good afternoon, and welcome to the S&U plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Anthony Coombs, Chairman. Good morning, sir.

Good morning, Lilly, and welcome to IMC. We regard IMC as a very important way of communicating with particularly retail investors, but also other investors who we may not be in regular contact with. Can I just briefly introduce our team here because people may not be totally familiar with all of them, certainly one of them, they won't be. Myself is Chairman, my brother is Deputy Chairman; Chris Redford is our Group Finance Director, who everybody will know; Karl Werner, who's the Chief Executive of Advantage Finance, our motor finance subsidiary; Ed Ahrens, who is the Chief Executive of Aspen Bridging, which does our property finance; and new to the team, Chris Freckelton, who is our Chief Financial Officer. So with those brief introductions, can I welcome you all and say that we will be going through the -- with the slides on our presentation. So for those of you who may not know the company as well as some of the others, let me just start by saying that this has been an interesting year, I think, both macroeconomically and for the finance business. And obviously, there have been the challenges, which are reflected in the results, particularly at Advantage, not at Aspen. And -- but that doesn't mean that we view the future with anything else but enormous confidence. Why you may ask given what's been happening this year? Well, the reasons are that through our engagement with the regulators in Advantage, in motor finance, was part of the 166 process, which is now cleared and is now behind us, and we have a very good relationship with the regulators and we're regularly in touch with them. And as a result of the process, we learned a lot and we've become more efficient. And already, that is being reflected in an upturn in business for the current '25, '26 financial year. So very good. The Aspen business, the property bridging business, continues to do very well indeed and produce record results, and we see no reason why that will not change in the coming year. Obviously, there are certain things that still overlay the motor finance, indeed, the finance industry overall, which I'm sure that people on the call will be very much aware of. The main one of which is the Supreme Court decision which is scheduled now, having had the hearing about a week ago, scheduled for the end of June, July. And we await that with some optimism. The reason why we wait for this in optimism is because there's no doubt about it that the Supreme Court is aware of the importance, particularly at a time of poor consumer confidence in the U.K. economy generally and actually poor business confidence, they are aware of the importance of access to credit, particularly to the sections of the population that we have traditionally served. They deserve finance the same as everybody else to buy cars, to go to work and to take the children to school, and that's precisely what we are proud of having provided over a 26-year period. And in fact, that's why if you look at the slides on Page 2, which is the one before my introduction, we do start off by talking about our wonderful customers and staff because ultimately, at the end of the day, it's the people we serve and the people who serve them that actually make a difference between a successful business and otherwise, and is one of the reasons why -- which has underpinned our success over the last 25, 26 years and indeed for the S&U Group as a whole over the past 88 years. And on the highlights and most of the people will see them, obviously, for the group, there has been an impact in terms of the regulation and all that has been the uncertainty that's caused in terms of the group profit but we expect that to rebound this year, which is why we're calling the slide presentation ready for the rebound. And we are, as I've just said, most of that is made up or a large portion of that GBP 11 million in the group impairment charge which our finance -- our Group Financial Director and our CFO, will explain as we go through. What we are doing, though, if you look at the highlights, is maintaining the dividend, because we've always felt that our shareholders have been with us for a long time, we owe them a sustainable and consistent return on their investment. And that is why although the profits are down compared to last year, we are going to be nearly maintaining the dividend at 40p subject to the agreement with our shareholders at the AGM in June, which I anticipate will come through. The final point that I would make on the highlights, if we're going to go forward with confidence and strength, then you need just a firm base and S&U has had and always will have a very strong financial base. And we have a large amount of equity invested in the business. Overall, the gearing for the business has fallen this year to about 80% from the slightly higher last year. And our group facilities and the headroom they give are GBP 280 million on a medium-term basis. And at the moment, I can tell the audience that, that gives us GBP 100 million worth of the headroom to, first of all, to growth; and secondly, to offset any judgment that may be received from the Supreme Court. So with those optimistic, but nevertheless realistic thoughts, I'd like to go on to the group financials. And over to Chris Redford.

Good morning, everybody, and thank you, Anthony. The income statement, I'll try to pick out a few highlights on here. So you can see strong growth in Aspen revenue, on the bridging side, and also in Aspen profit, you can see that's risen from GBP 4.8 million up to GBP 7.2 million, so a 50% increase, which we're very pleased with. We go into the new financial year as well with increased book debt at Aspen, which augurs well, we hope for the future. On Advantage, more of a year of consolidation. While the regulatory investigation 166 was going on, fortunately, with help from Karl and the team and a lot hard work, that is now behind us, and we think we will get some more focus on business and increasing lending and concentrate on collections going forward. But for this particular year that we're looking at here, that has led to an increase in impairment of, as Anthony said, GBP 11 million. Most of that impairment number is also due to Advantage, very little impairment in Aspen, and that's hit the group profits for the year ended January '25. You will also see another couple of items in the income statement that I should point out. One is finance costs, they've gone up by GBP 3 million. That was largely to do with average borrowings being higher in H1 this year and also average Sonia rate being higher in H1. So now we have slightly lower average borrowings going into the new year. So the trend should be slightly different. And obviously, on the Sonia rate as well, recent Bank of England base rate increases puts us in a slightly better place. There's an unusual item for us, there's an exceptional item in the income statement, and that's to do with something that I had in contingent liabilities for the last year. It's now crystallized. So we've agreed with the FCA and the skilled person that there were some collection charges historically, levy on customers that we need to remediate. The amount of that in total for Advantage is GBP 2.3 million. The reason it's GBP 2.7 million exceptional item is that we've got about GBP 400,000 in cost there as well. So that explains that figure, and it is an unusual item for us. Bottom line, therefore, GBP 24 million versus GBP 33.6 million last year. If we go to now the group balance sheet on Page 6, please. Again, very simple balance sheet. It's all about receivables, borrowings and equity. You can see we split down the net receivables. So you can see that motor finance, in a year of consolidation and lending caution, has decreased from GBP 332 million down to GBP 283 million, and we hope to get that increasing again soon, and there are signs of that in the early months of the new financial year. Aspen carrying on growing as they were in previous year as well. So growth of (sic) [ from ] GBP 130 million up to GBP 152 million, which is what I mentioned earlier, gives us a bit of confidence going into the new year as well, which I will talk more about in the slides later. On the borrowing side, you can see GBP 197.5 million, GBP 223 million. We actually also had GBP 5.2 million cash in hand at the 31st of January. So that means our net borrowings are about GBP 192 million, and at that stage compared to committed facilities of GBP 280 million. So without further ado, I'll hand you over to our new Group Chief Financial Officer, Chris Freckelton, and he will talk through that funding business in a bit more detail.

Thanks, Chris, and good morning, everyone. So if we turn over to Page 7, this slide is consistent with previous presentations and aims to show the cash movement during the year split by business across Advantage and Aspen and also by activity types, so covering advances to customers, repayments and also expenses. So you'll note in the current year, borrowings across the group have reduced from GBP 224 million to GBP 192 million, and with Advantage reducing from GBP 177 million to GBP 130 million over that time due to, as already been mentioned, cautious lending and lower repayments. Meanwhile, Aspen has had the opposite effect, increasing from GBP 120 million to GBP 138 million at January 2025, and that's driven by receivables growth during the year. If we then move on to the next slide around the treasury and funding position for the group. So as Anthony mentioned, our current borrowings of GBP 192 million sit comfortably within our committed facilities of GBP 280 million. And during the year, we've managed to enhance the maturity on the 3-year club for another year to May 2027. And since year-end, our borrowings have reduced slightly further to GBP 180 million, providing GBP 100 million of headroom against our current facilities. So I'll now pass on to Karl Werner, the CEO of Vantage, to talk you through their FY '25 performance.

Thanks, Chris. Welcome. On to Slide 10. I'll just unpack a few key elements. This is about lending. So during the period, as you see over the last 12 months, we actually have managed reduction during both our regulatory engagements as well as some retooling as far as our appetite is concerned, you would have heard me talk at the half year and prior to that a desire to lean into the higher quality tiers, which we have done and put those new elements in place with regards to the platform and also concluded our discussions with the regulator. So we're sort of back to throttle on really, and you'll just see the first hint of that in the final month of the financial year with that gathering pace as we get into the new financial year. So there's a move to quality, certainly very firmly right in the middle of the nonprime market and looking after those underserved, underrepresented customers in a strong position with the right quality and the growth of average advance to grow advances sustainably considerably in the year ahead. If we turn from the front rows of the business sort of more to the rear and collections on Slide 11. What I'd highlight here is, of course, we've had a difficult 12 months as has so many others of our peers in this market over the last 12 months, you would have seen much stronger recent improvements over the last 3 months. The phrase I'd like to highlight when unpacking this here a little bit is that abundance of caution that you'll see in the slide on the top left. But also pleasingly, you're seeing the tick up as the year draws to a close. And all of our regulatory engagement limitations were concluded and lifted. And we are in a much better position, latter results over this last quarter have been much stronger off the back of, as I say, a greater investment in the collections platform. Turning once more to regulation on Slide 12. I'll only put out a couple of highlights here. And the key message really for me is where we have control, we're in an exceptionally good position. Consumer Duty, an exceptionally good spot. The Borrowers in Financial Difficulty review concluded successfully. Affordability and sustainable lending reviews all concluded. We don't have any discretionary commission exposure. Although, of course, there's elements outside of our control, Supreme Court judgment and the FCA direction that will follow thereafter, and we await as we all do for that in the summer. And then on the other side, its always good to highlight, I think as you heard mentioned previously, our focus on customer care and looking after our customers we have for over 25 years is evidenced very clearly with the metric from the financial services we continue to be a top table provider. One last piece of summary on the next slide as far as the last 12 months, and it's important for us to really reference that we're going to get value from that engagement and that year of consolidation, a large investment both in people, competency, technology and our digital tooling. And you'll see some of those listed here. And probably out of all of them, new telephone systems, new premises, new 365 platform is to underline the strategic USP we have with being in charge of our IT development with an in-house team almost entirely, which enables us to bring to market quite quickly a very sizable platform upgrade for our customer portal, which had 30% customer engagement in the first few weeks, allowing 24/7 engagement with their agreement and repayment if necessary. And then lastly, turning to the future, what are we thinking, what am I highlighting to you for the next 12 months, the key takeaways are we returned much more to a business of pro-activity rather than reactivity, focused on building our performance much stronger sustainably whilst maintaining that clear focus on offering a vital service to our customers with a few highlights there in the bullets as to what our areas of focus, credit risk technology, dynamic pricing, looking at adjacent distribution channels and asset classes and making much better use of MI and the data and with the new world of AI in the future. And with that, I'll hand back to Chris.

Thank you, Karl, for an excellent update on Advantage. There are four metric slides to follow now that we show you every year, just to give you an update on how Advantage metrics are evolving. You can see on Slide 15 that the average advances ticked up further to GBP 8,600. The interest rate has gone down slightly and the average customer score has gone up slightly. Again, that's all about the tier mix that Karl said where we're attracting slightly higher quality customers, so they don't pay quite as higher rate and they also tend to take slightly bigger advances. You'll also see on the number of loans, 12,703, that reflects the caution that we talked about earlier. So to Page 16. This is again a chart that will just give you an update on every year. So historically, there's been a very good correlation between the way customers make their first payment and the end outcome in terms of bad debt percentage after 5 years, which is the inverse axis on the right-hand side. So the blue line is the way customers make their first payment, and you can see that going back right up to 2003. And the red line is what the end outcome was for that business after 5 years. Since about 5 years ago, the red line becomes the dotted line but the process isn't finished yet. So you can see there's still some sort of correlation. We've been through a difficult year. So some of that red dotted line is still ahead of us in terms of as you get to the right-hand side of the chart, but we still think there will very much be a correlation. And it's quite pleasing to see the uptick in the blue line, the first payments recently received, you can see right to the right of the chart. So I hope that is a helpful update to that information, and I'll hand back to Chris Freckelton to talk you through a couple of more metrics slide for Advantage.

Thanks, Chris. So this slide is just a simple payback chart of the investment by Vantage by year of origination, including the customer advance and the cost of sales that originate in that business, which is denoted by the blue line. And against that, the repayments that have been received from customers, which is denoted in the green line. So collections are largely complete for January '18 to January 2020 cohorts with future years forecasted collections based on historical analysis. And you'll probably note that the Jan '23 origination year is slightly lower than last year in respect of the forecast, and that's due to the higher cost of sales when we originally wrote that business, but also the challenges we mentioned around the collections performance this year. We then move on to the next slide. So this is an analysis of the book at January '25 versus January '24 based on arrear status. So from up to date to 6 plus in arrears. And for the reasons we've already discussed around lower repayments, we have more debt in the 6-plus category this year at 9.3% in comparison to this time last year at 3.2% and that combined with the lower advances that Chris alluded to earlier, means that we also have a smaller proportion in up to date at 64.5% versus 74% this time last year, albeit these metrics have improved post year-end. I'll now hand you over to Ed Ahrens, the CEO of Aspen, to talk you through their FY '25 performance.

Thanks, Chris, and hello, everybody. As both Anthony and Chris have said, strong performance for Aspen for the year, steady and consistent on new lending through the year as well as the same on repayments on a quality book. That's led to a new record in terms of profits at GBP 7.2 million. We see the trends through the year as being positive and our outlook for the future is expect growth in this market this year and for our business. Turning to Page 21. This is a slide we've talked through before. We look at the performance of the business over the years, and we've made some good progress on some key factors. So you can see at the top line, steady growth of the new loans on a year-on-year basis. We're in a good position on average loan sizes at GBP 940,000 for the year. That's broadly at the level it is for the average in the market. We've continued to improve our cost of sales. You can see that over the last few years at 1.1% for last year, partly driven by more direct business and also partly driven by returning customers to the business as well as a wider broker distribution network. In terms of LTV, we've been consistent for many, many years at around 70%, 71% last year, very consistent there, and been working to manage and improve our blended margin rate. You can see that for the year -- for last year and steady on all other sort of key factors for the business. If we can turn to Page 22. Just in terms of the bridging market and sharing some thoughts from others in terms of how they see it. We've been members of the BDLA now for since we launched, and they've been seeing consistent growth in the market for bridging over those years and broken through some new records for last year. And there you can see from the pipeline of business from lender members of the BDLA that they're expecting growth through this year as we are as well. In terms of the wider market, Mintel talks about growth over the next 5 years. That remains our outlook view as well. Market values and house values, we see that there's going to be -- expect a growth over the next few years of that, albeit at a relatively modest pace, which is fine from our perspective. Conditions are favorable. And rates from a wider market and refinance have been coming down and thus making it easier for refinances and helping with transactions that have more recently been going on the way up. We can move to Page 23. Lots to focus on for this year. I mean, in terms of returning customers and direct business, those are strong areas for us and obviously widening our product capability with slightly longer terms and new facility arrangements and basically exploring new markets in terms of broker channels, and we expect that to be underpinned by our investment in our staff, in our people as well as improving our efficiency of the operation. And we expect from our perspective, we see a very bright future for the business.

Good. Well, thank you very much indeed, Chris. I don't think anybody underestimates the challenges that the business, particularly obviously Advantage have faced over the last year. And -- but the important thing is not the challenges, but how you react to them and what they look and what they imply for the future. And I must say that I'm very confident that we will get the rebound that we highlight this with next year, both from Advantage and from further record results from Aspen. Obviously, a lot depends upon the general macroeconomic environment in which we operate. And obviously, tariffs and government policy impact that. But I'm overall rather confident about that because I think everybody has got an interest in improving the growth rate of the economy, which hasn't moved very much over the last 15 years. The Supreme Court decision is obviously something that the whole of the financial market, not just motor finance market, is going to have to take into account. But again, I'm optimistic about that because certainly reading the transcripts of the proceedings so far at the Supreme Court, it does indicate that there's a sense of realism and the importance of access to credit if the -- if our customers and the customers generally are able to finance the way they want to, which is going to have good overall macroeconomic effects in any way. So overall, extremely confident as to what's going to happen, but I'm looking forward now to answering your questions. Lilly, are you going to read them to us?

[Operator Instructions] And as you can see, we received a number of questions throughout today's presentation. And perhaps if we dive straight into it, the first question we have here reads as follows. Have you seen HMG's pro-growth agenda feeding through how the FCA interacts? And can we expect a more balanced field of play?

Short answer would be yes, and there is a sense in engaging with all regulators, I would say, but they are obviously very cognizant of the government's growth agenda and where they would like to focus their efforts. So a really good question, but yes, it's a very generalist answer, I'm afraid, but have we seen it in our discussions, I would say, most definitely yes.

Perfect. The next question here is, is S&U exposed to DIC Commission? Or would it just be a secret or semi-secret exposure?

It is not exposed to DIC often referred to as DCA in some of the publications, you'll be reviewing on this issue, which is obviously very, very positive. Disclosure or the judicial review or sort of the judicial process happening in Supreme Court, every lender that lends through an intermediary has an element of interest in that particular case, ourselves included, as well as asset finance and other types of regulated firms that lend through intermediaries. So that's super broad on the Supreme Court side, DCA much more limited to those that operated that practice in years gone by, including when it was brought in 2021.

Just moving on here. Of your introducers, how many are motor dealers acting as brokers versus pure finance brokers? Has this ratio changed in recent years?

It hasn't. It's sort of single digit from a percentage perspective. Any dealer that refers proposals to a lender, consumer finance lender is also a broker, as you'll know. So dealers that aren't regulated in that way, won't be referring business to lenders in that manner, but it's a single-digit number. The majority of our business comes from the brokers that have operated in the market. So we're very well established for some significant period of time.

The next question we have here reads, on the demand side for business, what are you seeing on the credit quality there? Do you see opportunities to cover gaps or better credit quality demand that other players cannot fill?

If that's to our advantage, I'll say most definitely yes. It's a very wide sort of question. The modern technology let alone what AI may well do is moving us much more progressively through what those in the credit risk circles call risk singularity, which rather than try to cohort your population into 3, 4, 5, 6, 10 tiers, you can get much more granular with the risk weighting. I'm not saying almost on a per customer basis, but on a much more granular and meaningful and bespoke basis to that customer. So there is always upside to that. What you are looking for is the meaningful profit pools within those gaps where your repayment estimate is accurate within your credit risk appetite and makes for a good sustainable return going forward. So to the question, yes, there will be a lot of upside as this tooling comes on stream in the weeks and months ahead.

And I think it's worthwhile saying that I agree entirely with Karl that Advantage's approach has always been fairly broad in terms of the kind of customers it wants to take on board, and the results are reflecting that. Obviously, over last year, we've pivoted more towards higher-end customers and those higher tier customers, customers who haven't had so many or as many problems with their credit in the past. But that doesn't mean that we don't feel that we're able to deal with people who have had problems in the past. And that's the whole point about access to credit. And as Karl said, if we can use AI, which we are now embarking on, to identify individuals rather than sectors of individuals who look as though they're likely to be able to pay in the golden nuggets as we call them, then yes, we're certainly doing that.

The next question we have here is around Aspen. Can you please elaborate more on the strategy of going for the due community credit? As a shareholder, I see it as an increased risk in the portfolio because of the structure of this kind of business seems more like investing on equity rather than credit.

I'll obviously take that. Yes. So I mean, we've seen a demand for that product. And what we've done is we've created the structure that supports that product in the community, adapting the hedge risk agreements. We see that as being both an opportunity, but also as a low-risk lending situation, partly due to examples, the borrowing that we can see from cases, but also in the way we structure that.

I think it is worthwhile saying that as the risk, for people who may not be aware of it, is orientated towards the orthodox Jewish community. And one of the great advantages of the Jewish community generally but the orthodox Jewish community is that they are extremely responsible in terms of how they look at debt. And there is obviously a huge amount of social pressure within the community to ensure that their credit ratings are strong, and we would anticipate that as a result, this will be an extremely successful product.

The next question we have here reads, well done on the extended maturity of the debt, but do you have any plans to fix the coupon on a portion of your borrowings.

I think I'll just start off, and then hand it over to the team. We are obviously always cognizant of both the cost and the scope of our borrowings. I wouldn't want to say more on that, but we always keep it under review. If it seems right to us that we should fix our borrowings in order to improve their scope and improve the cost of them, then we'll do it. But I wouldn't want to say more than that. We are always reviewing it. In fact, we always -- we have actually [Technical Difficulty] to review it [Technical Difficulty].

Just moving on here. Today's statement refers to 70% of new loans being given to high-tier customers. How does management see that percentage moving in the years ahead given the new forbiddance regime? And why can't Advantage simply drop tier D/E borrowers although -- altogether given the apparent greater risk of losses from this subsection?

That's a great question. So thank you for that. I mean it's certainly set to the higher tier, I mean, you're talking only across 5 tiers across the full gamut. So it's probably the top half, 2/3. Could it broadly stay in that particular area? The answer probably will be yes, but with the better credit risk capabilities that we're bringing on stream very shortly, I do think there's a good return and a more limited appetite into those higher risk tiers. And we're always very conscious of the fact that we're there to be the champion of the underserved market and to provide a service and a facility and the access to credit. But it has to -- as we rightly alluded to there, it has to stack from a financial return and an acceptable credit risk and regulatory risk perspective. So I think we're actually in a pretty good space right now, but I think we're going to be -- have an opportunity to be a lot more focused on that in the future.

And I think the last question we have here reads, how many customers were adversely affected by the Advantage's previous practices that led to the exceptional item.

It's a minority, I would be comfortable in saying. You have to remember that this particular review focused on forbearance. So therefore, by definition, is a customer cohort that had an arrears experience with us and obviously, the vast majority of our customers don't. So that should give you an indication as to actual individual customer numbers that impacted specifically for that. So think in terms of it's only for the arrears, so that's already the minority and then an awful lot of activity that wasn't subject to that particular finding. So you weigh down the numbers accordingly.

Thank you all for answering those questions as you can from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Anthony, could I please just ask you for a few closing comments?

Yes. Just before you go, Lilly, I think there are -- there is another question from [ Maynard ] which we haven't answered, which I think I'd like you to read and so we can -- there's two more questions...

Three.

Three more questions.

From Maynard.

Yes. And given the fact that we have time, I think I'd like to go through them. So could you please read them out?

Yes, sure. Today's statement said Advantage offers motor finance mainly through independent credit broker intermediaries and only 10% of transactions were written by motor dealers acting as credit brokers. S&U's management believes only transactions written directly by dealers and not by dealer through intermediary are subject to the Supreme Court decision. Is that the case?

And also there's some addition, wasn't there?

Also, can management specify how the remaining 90% of transactions are written? Presumably, the 90% is mostly independent broker intermediary supplying loans through motor dealers at the point of sale? Or are there significant numbers of transactions undertaken by borrowers without any involvement of the motor dealer?

Okay. So great question here. As far as the scenario has been looked at, and you would have seen in the results of other lenders, there's a large question over whether Supreme Court is relevant to, as you rightly call them, sort of dealers rather than finance brokers, which operate both by dealerships and also on a DTC, direct-to-customer basis. So our leanings and thoughts around that are formed by some of those more recent opinions and our review of that, whether that may well be the case. So I do underline and we will underline we are subject to seeing much more detail around the judgment in July. So that's the first part of that question. But both the Supreme Court and of course -- sorry, the FCA are aware of that particular perspective. And secondly, the split of business introduced to us is, as I say, roughy sort of 5-ish percent retention, current customers. 5%, 6%, 7%, something around that motor dealers and the rest are dedicated finance brokers, and they operate both from providing a financial offer service by dealerships or direct to customers and sourcing vehicles. So you'll be aware of those two broker models, that is sort of approaching 90% of our business comes from the broker market.

Could I just ask you to go to [ McGene's ] question on Aspen. Well, he's asked an interesting one.

Yes, sure. Could you discuss client concentration at Aspen? Specifically, how much of the loan book is with the top 5 clients?

I think it would be fair to say that we've got obviously a range of values, 10% or so of the portfolio is above GBP 2 million, but range is obviously from...

[Technical Difficulty] what concentration [Technical Difficulty].

So most of the majority, 90% is below GBP 2 million, basically out of the book.

And customer concentration. I mean, obviously, you deal with a wide variety of customers, which hasn't changed much over the last 3 years, is it? And we tend to do more business with smaller...

Smaller number of larger, but the majority are below GBP 2 million in terms of loan size.

I think can we take [ Maynard P's ] question, I think it's quite an important one. Following the FCA submission to Supreme Court, how can management reassure shareholders that brokers acting on Advantage's behalf have always complied with the CONC rules?

We got some really good detailed questions here. So I'm just -- I'm saying, staring at the screen, not to try and see, I'm just trying to make sure I'm reading the question correctly for our Chairman sort of read it out. So can management reassure shareholders of brokers on our behalf adhere to CONC? Well, we have a few things to bear in mind. The brokers that we deal with are all in a directly regulated review and that oversight from the relevant regulation, which is the FCA themselves. So there are certain tests and metrics you have to meet to be regulated as a broker. So in many ways, the FCA provide that or the fact that regulator provide that assurance, but we also have our own oversight processes, which have been augmented somewhat over the last 12 months also and will continue to be so that give us some higher degree of assurance to all of our introducers, whether they be brokers or dealers, are adhering to the relevant regulations. So I hope that gives you the answer. Obviously, they're third parties, they're regulated. We have oversight. The great thing as far as Advantage is concerned because we've dealt with them for a considerable length of time and they are very well-established names in their own right and enterprises. So that really is what combines to give you the best degree of comfort you can get that the third-party intermediates are abiding by the regulations that we will adhere to.

Thank you, Karl. Should we just -- I mean, [ Edward G ] has asked one, we've been replying to many, so let's -- Maynard P has another. So Edward G, from which date did Advantage Finance begin disclosing the amount of commission, not just with existing customers? And was that over -- ever a time when you didn't disclose it at all?

The second part of your question first, I mean, Advantage has been running lending since 1999. So there would have been a time in the past, forgive me for not knowing the year, that there wouldn't have been the existence of commission disclosure sort of way back then. As far as disclosing the amount, Advantage made the same change as the entire industry, and that was in October of 2024. Our disclosures prior to that had the benefit of being quite explicit as far as on document as well as direct to the customer, unusually, and that was existence and nature, which was the regulation at the time, which all lenders adhere to and hence are somewhat perplexed as to the court appeal decision to suggest that wasn't good enough. So in the house that we've been doing the existence nature as per the regulation for a considerable period of time, the amount along with all lenders was coded in and disclosed in October.

Right. Just one final one maybe from Maynard P, [ Maynard Pearson ]. Can I clarify the fixed fee commission model? Are the commissions paid as a fixed percentage of the loan value or simply a fixed amount regardless of the value? And could some finance brokers and could some brokers [Audio Gap] fixed commissions are greater than commissions paid by competitors? Go ahead.

So let me pick that part one at a time. On the whole, vast, vast, vast majority has fixed some commission, both are quite common as in a fixed percentage of the advance or a permanent figure regardless of advance. We are much more the latter. One is not a particularly more sort of regulatory approval or against the judgment any more than the other, so that's just sort of a point of fact, a more fixed fee. And this -- could intermediaries be led by the amount of commission? Well, maybe, but I think the customer rate is uniform as is the terms of acceptance and also the best rate outcome is where the regulation is, in most cases, where there is multiple acceptances. So commission is a factor but it's a lot more neutral as far as this business is concerned. And the vast, vast majority, there will be 1 or 2 perhaps very small percentage cases where fixed pound fee figures in Advantage's case.

Good. Thank you very much, Karl. I hope you found that interesting, reassuring and enlightening. And thank you very much for your attendance. I would just say, as I did at the beginning, that we are extremely confident as to what the new financial year is and will bring because we've overcome a number of challenges in the last year, and we see rewards for our investments in doing so and continued investment in the business being strong for '25 and '26. So I hope that's been helpful to everybody. Thank you to IMC and to Lilly for providing us with the opportunity talking to our valued shareholders. Thank you.

Thank you all for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order for the management team to better understand your views and expectations? This will only take a few moments to complete and I'm sure it'll be greatly valued by the company. On behalf of the management team of S&U plc, we'd like to thank you for attending today's presentation, and good afternoon to you all.